F&C Asset Management agreed to acquire Thames River Capital, a London-based manager that runs about £4.2 billion ($6.4 billion) in assets, mostly in hedge fund and hedge fund-of-funds strategies, according to an F&C announcement.
F&C will initially pay £33.6 million, with an additional £20 million if Thames River meets certain financial performance targets on Dec. 31, 2011, and June 30, 2012. The acquisition is scheduled to close during the third quarter.
“We believe (the acquisition) will accelerate the shift to higher fee margin products and enhance our distribution capabilities,” Alain Grisay, CEO of F&C, said in the announcement. Mr. Grisay could not be reached for further comment.
The deal is the second recent purchase of an alternative manager since F&C bought REIT Asset Management in 2008, a real estate manager with about £3.5 billion in assets under management at the time.
Kevin Pakenham, managing director in the investment banking division at Jefferies & Co., based in London, said the deal is “a good bellwether” indicating that more M&A transactions are done for strategic — rather than consolidation — reasons.
“In this case, F&C is broadening its product range, strengthening its absolute-return product offerings and adding distribution capability outside of its traditional (clientele),” said Mr. Pakenham, whose firm advised Thames River. “I think we’ll see this type of a strategic move occurring more in the future.”
Alternative managers continue to be “the hot spot for acquisitions,” Mr. Pakenham added. For example, earlier this year, Affiliated Managers Group announced its planned acquisition of London-based private equity firm Pantheon Ventures. Religare Enterprises, a financial services firm based in India, also agreed to buy a majority stake in private equity and venture capital firm Northgate Capital.
F&C reported £101.5 billion in total assets under management, not including assets from Thames River, as of March 31. Thames River was established by Pacific Investment Group, which seeds asset management firms.